Deep South Forest Products: management unfair labor practices during union decertification?

Schnake, Mel ; Williams, Robert J.

CASE DESCRIPTION

This case examines the process by which the unionized employees of a firm take steps to decertify their labor union as their bargaining agent. Further, the case examines certain actions taken by the firm's management during the decertification process, and whether those actions are illegal as defined by the provisions of the National Labor Relations Act.

The case has a difficulty level of three, appropriate for junior level students. The case is designed to be taught in one class hour, and is expected to require one to two hours of outside preparation by students.

CASE SYNOPSIS

A firm and its employees' labor union(s) often share a tense and adversarial relationship. From time to time, employees may decide that the bargaining advantages provided by their union no longer secures them the wages and benefits they seek, and they may seek to have the union decertified as their bargaining agent. This case examines this scenario, and demonstrates how a firm's management can legally express its views to its employees regarding the pros and cons of a union decertification. This case is an effective teaching tool for students in a labor relations course, a human resources course, and can also be used in the introductory management principles course.

DEEP SOUTH FOREST PRODUCTS

Background

Deep South Forest Products, located in south Georgia, is a manufacturer of utility poles and other lumber products. The company was founded in 1934, and employs about 200 workers. The company is one of the largest employers in the area, and the firm's management has had a fairly good relationship with its employees over the years. Employees at Deep South Forest Products Company had been represented by the United Food and Commercial Workers Union, Local 1996, AFL-CIO for the past 30 years. The current labor agreement expires on November 21, 2003.

Beginning in July, 2003, Deep South Forest Products got employees to sign petition forms headed "We, the undersigned employees of Deep South Forest Products Co., no longer wish to be represented by the union." Additional employees signed individual cards or slips of paper rather than the petition. On August 26, 2003, employee Wallace Henderson filed a decertification election petition with the NLRB based on this showing of interest.

August 28-30 Speech to Employees

During a three day period between August 28, 2003 and August 30, 2003, General Manager, James Green held a number of meetings with employees during which he read the following prepared speech.

Good to see everyone. I hope everyone knows me. I'm Jim Green. I've been your general manager for the past 8 months. Let me get right to the point. We received word yesterday that employees here have filed a petition to get rid of the UFCW union. Quite frankly, I'm real proud of you for doing this. I'm glad that many of you feel like me that we're better off without a union here now.

Of course, most of you all know this union has been around here for a long time--as I understand it, for over thirty years. Heck, this union has been around here longer than I have been alive. I appreciate the fact, that over the years, several of our older employees have told me why this union came in here to begin with. We did some things in this company and around this part of the country to blacks I'm not proud of. It was wrong. I can understand why you all went after this union. Obviously, at 24 years of age, I wasn't around then--but my family was. We all take responsibility for the discrimination and the unfair treatment that took place. That certainly doesn't change anything--but I want you to know exactly how I feel.

Secondly, I want you to know that I will not tolerate any discrimination now or in the future. All our older employees have made enormous contributions to our company over the years. You have worked long and hard in very difficult circumstances to make us successful. I pledge to you that I will never forget that. I consider this decertification petition as giving us a second chance. We can't change the past but we can do something about the future. It's a second chance for all of us as managers. As for me, I do not want to blow this chance.

Let me talk about this decertification petition and what it means. You may know that our contract expires at the close of business on November 21, 2003. We have notified the union that even though we have a bargaining session scheduled for October the 9th, that it is our intent to terminate the agreement on the 22nd of November. Normally the NLRB will conduct an election within 45 days after the decertification petition is filed. That would mean we would have an election around the first or second week of October. About 6 or 7 weeks from today. We'll have plenty of time between now and then to give you the exact time and place of the election.

In the meantime, we still have an obligation to bargain with the union over the contract that's in place. With a decertification petition filed there's a quirk in the law, that even though a decertification petition is filed, we still have to bargain with the union unless the company has been notified that more than 50% of the employees have signed the petition. If that occurs, then the company can withdraw from bargaining and withdraw recognition from the union. In other words, if you all give us more signatures so that you exceed the 50% mark, the union will be gone. If this doesn't occur, any contract that would be reached in bargaining before the current contract expires on November the 21st would be null and void if you all voted the union out.

When we got notice of this petition we really had several options. Actually three choices. Our first choice was to use this decertification petition to cut a deal with the union. Last time the union was so afraid of not reaching a contract that they jumped on our first offer. At your expense, they saved us a lot of money in our last contract. So from a pure business standpoint--it's clear that the company could save money with the union. But there's more to this business than just money. Certainly we've got to make a profit. We feel you deserve a company that really cares about you and shows it. Our second choice was to be neutral and not do anything and let you make up your mind without any input from us. But our final choice--our third choice was to work as hard as we could at communicating our views and letting you know how we feel about this decision.

In any event, we expect the union to campaign hard and if we didn't do anything, then the union would be out there campaigning against our employees who worked so hard on this petition.

Speaking of union campaigning--I have received information that the union has been telling you that if you vote them out, the company is going to reduce your wages, benefits and pensions. That is an absolute lie. Let me state this as clearly as I can. If you vote the union out, we will not cut your wages and we will not take away any of your fringe benefits. The union is only trying to use scare tactics to frighten you into voting for them. Don't let them do that to you. Ignore their scare tactics. I feel so strongly about this--I'm going to put a guarantee in writing that we will not cut your wages or benefits.

In making this decision, we analyzed the pros and cons. Here's what we thought about. Unfortunately, we'll have to pay those damn lawyers to make sure we do things right. Quite frankly, if I never have to deal with another lawyer or union representative I'll be happy--real happy. They drive me crazy. But we know, the union will try to file unfair labor practice charges and all that stuff, so we have to have an attorney. And of course it will take time and effort to work on this and take time away from our normal duties so it will be expensive to wage a campaign.

Second, there's no guarantee that the union will be voted out. That decision is y'alls. We certainly don't know for sure how it will turn out, so we could spend all this effort and money and y'all could still be stuck with this union here.

Third, as I said with the union in here we've been able to save a lot of money in negotiating our contract. As you know, wages and benefits have not increased much at all in the past several years. Certainly--significantly under the national average. Apparently the union has agreed to all of this because they've had no strength or don't care any more. So getting the union out of here would not save us money. That's for sure, in fact we would probably save more money by keeping the union in here and continuing to drive a hard bargain. Now fourth, we know that the union is going to scream and raise all kind of hell if we fight them. So those are all the negatives.

On the other hand, we have a large number of employees who don't want this union in here. I know from talking with your managers and supervisors that they don't want the union in here. I sure know that I don't want the union in here. I'd like to see a new era begin where we are truly a family. Where we worked together as a team with a real family atmosphere of mutual respect and trust. I know as managers we have to earn your trust everyday. I understand that many of you would like to see what would happen here if there weren't a union. I think you deserve that chance to have a real family atmosphere.

I'm real excited about this myself and I'm committed to spending a lot of time over the next several weeks before this election to be able to talk with you in detail about what all of this means. As I told you earlier, we have told the union of our intention to terminate this agreement when it expires on November the 22nd. That means everything will be back on the table. Everything would be bargained for. Everything would be up for grabs. You all know in bargaining there is nothing certain.

With regard to the union I know many of you are paying dues to the union--spending money paying for them to represent you. That's your choice. It's your money. You've worked hard for it. I'm not going to tell you how to spend your money. If you want to pay it to the union--that's your business. On the other hand, many people have asked how they can get out of the union. Well if you have any questions about how to do that it's covered by the checkoff authorization on the last page of your contract--page 55, which requires you to give the company written noticed of stopping your dues. Or you can just see Personnel.

Other people have indicated that while they haven't paid union dues they may still vote for the union because they feel they need it as a security blanket. Perhaps they can't in their minds ease the memories of the past. Maybe they're concerned that if the union's gone--they're not sure the company will do right by them. Well, first of all you've got my word, for whatever it's worth to you, that we are going to do what's right. But more importantly, it would make no sense for us to make the decision to communicate to you our views against this union--if we were not prepared to do what was right. We know it'll probably cost us more money this way but we feel you deserve it and we want to take responsibility for your future and be held accountable. We know that if we don't do what's right, then you can go get this union back here in a heartbeat. I think that's the best insurance you've got.

I don't think this union has represented you very well for at least the past 10 years. I think you know that. Their approach has been to sell you all out for some dues money.

Since I've been your general manager I see a change. I see us communicating and being honest with each other. That's the approach I want to have--that's the way I want to manage this plant. I want us working together without the interference of lawyers and union reps--just us - working together as a team. I don't like the approach we've taken with this union where we were out to just get the best deal we could for the company and basically the hell with our employees. I don't want to have that approach. I would like for us to say our employees have voted the union out--they fought for us and we need to fight for them. I'll commit to you that I'll do just that. Let's get rid of this union and let's get back to working together as a family. Thanks.

Deep South also signed a "No Cut Guarantee" which stated "I, Jim Green, Guarantee you, The Employees of Deep South Forest Products, That If You Vote the Union Out, Deep South Will Not Cut Your Wages And Will Not Take Away Any of Your Benefits Or Pensions."

Tall Pines Newsletter

On August 30, 2003 in the Tall Pines newsletter mailed to employees, Deep South included the following statement.

I have been asked whether we will make improvements if the union is voted out. I can't make any promises about that during this election process because that would be illegal. Even though I have strong feelings about this, because of the law I have to be very careful about what to say.

If there is no union, the law would allow us to make improvements without first having to bargain with the union about those improvements. There have been several times during this contract where we wanted to give wage increases immediately. Instead, we had to go through the negotiation process with the union before we could put those increases into effect. Keep in mind that it was the Company that told the union we wanted to make increases.

Without a union, there is no requirement to bargain before we give an increase. Again, I can't promise you that we will grant benefit and wage increases if the union is voted out. However, based on the small increases negotiated by UFCW here, compared with the larger increases given in our other non-union facilities, you certainly would have been better off here without the union.

I can tell you that no reductions will be made if you get rid of the union. Also, since the union has no power to deliver wage and benefit increases, the UFCW can make you all sorts of promises. If you have any questions, please let me know. Thank you.

September 4-6 Meetings

During a series of meetings with employees held between September 4-6, 2003, Jim Green discussed differences in pay rates of unionized employees and employees at Deep South's non-union facilities. Green stated that average pay levels were higher at the non-union facilities. On September 6, Deep South announced that it would withdraw recognition of the Union as the official bargaining agent of the employees and would no longer bargaining with the Union once the collective-bargaining agreement expired.

Withdrawal of Union Recognition and Wage and Benefit Increases

On October 31, 2003, Deep South announced to its employees that it intended to raise wages 8% "across the board" once the current collective-bargaining agreement had expired. Further, Deep South announced that on January 1, 2004 it would implement a new health benefit plan, and issue a new employee manual with workplace rules different than those in place under the collective-bargaining agreement.

On November 22, 2004 Deep South, as promised, raise the wages of all employees by 8%. On December 6, Deep South issued a memo to its employees that beginning on January 1, 2004 the company planned to double the pension benefits of its employees.

The UFCW filed unfair labor practice charges alleging that Deep South violated Sections 8(a)(1) of the NLRA by promising to increase wages and benefits if employees ceased supporting the union, and encouraged employees to resign from the union and revoke their dues checkoff authorizations. The complaint alleges that Deep South's speech and statements "interfered with, restrained, and coerced employees in the exercise of employees Section 7 rights, in violation of Section 8(a)(1) of the Act." The UFCW alleges in its complaint that it believes the following specific actions to be illegal:

* the August 28-30 speeches

* the statement in the company newsletter

* statements made at the September 4-6 meetings

* withdrawal of recognition and refusal to bargain

* announcement of unilateral changes in wages, benefits and work rules

* wage increase on November 22

* memo notifying employees that pension benefits would be doubled

Mel Schnake, Valdosta State University

Robert J. Williams, Valdosta State University